GM, Cadbury Sign With YouTube Rival

LOS ANGELES General Motors, Cadbury Schweppes, Intel, Cisco and E-surance are among the charter advertisers that have signed aboard the YouTube-rival video site launching this summer from News Corp. and NBC Universal, the companies said.

The site will feature thousands of hours of content from at least a dozen networks and two major film studios.

During a conference call on Thursday, News Corp. president and COO Peter Chernin hailed the venture as “the largest advertising platform on Earth.”

The deal represents a seismic shift in the ever-evolving new-media landscape, quieting months of rumblings over how and who would be involved in the venture that’s widely seen as a counteroffensive to Google’s YouTube.

In addition to the charter advertisers, Royal Caribbean signed up on Thursday, as did another company that wished to remain nameless.

“We had not even announced this formally, and within four hours we had five charter advertisers,” said NBCU CEO Jeff Zucker, during the conference call.

Multiple Media Partners

Time Warner Inc.’s AOL, Microsoft Corp., News Corp.’s MySpace and Yahoo! will partner with the two companies to distribute the service to their users, who the companies say represent 96 percent of the U.S. Internet audience. More partners will be sought.

Each of these portals will have its own embedded player featuring the video content, which will include shows such as Heroes, 24, House and My Name Is Earl, and movies like Borat, Little Miss Sunshine and The Devil Wears Prada.

Not all NBC/Fox programming will be part of the deal, however; missing will be news, sports and Fox juggernaut American Idol, to which FremantleMedia retains online rights. However, original material may be generated exclusively for the site, just not at launch.

Zucker said they do not yet have a name for the company—they have dubbed it “Newco” for now—and he would only reveal that it would be available “sometime this summer.”

Initially, NBCU and News Corp. will contribute equity to the venture. NBCU’s Web syndication service, National Broadband Company, or NBBC, will provide the technology for the site.

The companies would not reveal financial specifics, but said an unspecified revenue-sharing plan would be set up for the new company, its distribution partners and the content holders. Chernin said Newco will employ a “state-of-the-art revenue split” among the involved companies.

NBCU’s Kliavkoff at Helm

NBCU chief digital officer George Kliavkoff will head a transitional management team for the new company. The site’s permanent management team will be announced shortly. The company will also have its own ad sales team.

The executives said most content on the site would be free, but full-length movies will be sold “principally” on a download-to-own model. As a general rule, if TV content is available for electronic sell-through on platforms like iTunes, it will also be available in the same way on the new site. Chernin added, however, that “most TV episodes, short-form clips and mash-ups” would be free on the site.

Although user-generated content can be uploaded and mash-ups of copyrighted material will be available, Zucker said professional programming is the key to the site. “The focus here is on the premium content,” he said. “That’s the value proposition here.”

Quest for Content

Both said they hope the site would feature content from sources other than NBCU and News Corp. and that they are open to partnering with any other content owners and distribution partners, including Google and its YouTube property, with whom they have been in discussions. “We are open for business with anyone and would like to be in business with everyone,” said Zucker, who mentioned that copyright protection and their economic terms are the only sticking points.

Zucker and Chernin stressed that Newco wouldn’t cannibalize their affiliates’ and other network’s properties.

“We have real evidence it drives traditional ratings on traditional outlets,” said Zucker, who said they would be involving their affiliates in Newco discussions in the coming days.

Copyright Protection

Zucker said one of the hallmarks of the agreement is an unprecedented level of copyright protection that would prevent other sites from pirating the service’s content. He mentioned that this is one of the main reasons both companies feel “good” and “comfortable” about the venture.

They said the windowing of the shows onto the site after they have premiered on television would be left up to the content owners. Both said News Corp. and NBCU content would be placed online in the same way that they now make it available on their respective Internet properties. On the flip side, their sites could also feature content that won’t be made available to the new site, Zucker noted.

Negotiations between News Corp. and NBCU have been occurring for months, but Zucker admitted it has not been a steady progression: “What brought it into fruition is that the distribution partners saw the real value in this … and that led Peter and I to realize how important it was to move forward at this time.”

At one point during the call, Chernin joked, “We’re thinking of merging prime-time as well because it’s gone so well.”

Not missing a beat, Zucker responded, “NBC will take that deal.”

Alex Woodson reported from New York and Andrew Wallenstein reported from Los Angeles. Paul Bond in Los Angeles contributed to this report.